The S&P 500 index, Dow Jones industrial average and Nasdaq composite rose strongly early in the week, but then erased most of those gains by Friday's close. Netflix (NFLX) soared on subscriber growth and guidance, while energy stocks busted higher as crude oil prices kept rising. Alcoa (AA), American Express (AXP) and UnitedHealth (UNH) jumped on their Q1 reports. That offset weak outlooks from Taiwan Semiconductor Manufacturing (TSM) and chip-gear giants Lam Research (LRCX) and ASML (ASML). The broader chip sector and Apple (AAPL) came under pressure.

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Stock Market Rallies On Netflix, Oil, Pares Gains On Apple, Chips

The S&P 500 index, Dow Jones and Nasdaq composite were all up more than 1% through Thursday, but by Friday's close were up about 0.5%. The major averages rallied through Wednesday on Netflix (NFLX) earnings and oil-fueled energy stocks. Stocks pulled back as Taiwan Semiconductor Manufacturing (TSM) warned on the rest of 2018, citing weak smartphone demand. Already pressured by weak ASML (ASML) and Lam Research (LRCX) guidance, chip stocks sold off. Apple (AAPL) also came under heavy pressure Thursday and Friday on iPhone demand concerns. The 10-year Treasury yield jumped to 2.958%, a four-year high.

Netflix Crushes Subscriber Estimates, Guides High

Internet television network Netflix (NFLX) added 7.41 million streaming subscribers in the first quarter, beating its target for 6.35 million. It ended the March quarter with 125 million subscribers worldwide. Netflix expects to add 6.2 million subscribers in Q2, topping Wall Street's target of 5.2 million. Netflix also topped Q1 EPS and sales figures and guided higher for those metrics in Q2. Q1 subscriber numbers benefited from new original content such as science-fiction series "Altered Carbon" and fresh seasons of comic-book series "Marvel's Jessica Jones" and comedy "Grace and Frankie." Shares shot up to a record high.

Chipmaker Warning Hits Sector

Taiwan Semiconductor Manufacturing (TSM) cut its sales outlook for the rest of the year, largely on softer smartphone demand, slamming chip stocks and Apple (AAPL). Taiwan Semi is the world's largest contract chipmaker and counts Apple, Nvidia (NVDA) and Qualcomm (QCOM) among its customers. Meanwhile, chip-gear makers Lam Research (LRCX) and ASML Holding (ASML) pressured semiconductor stocks a day earlier with weak outlooks. Lam's equipment shipment view for the rest of the year came in light, while ASML forecast a lower gross profit margin for the current quarter.

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Crude Oil Keeps Rising

U.S. oil futures rose 1.5% to $68.40 a barrel, hitting fresh multiyear high as OPEC and Russia will likely stay the course with their output cuts after a meeting in Jeddah, Saudi Arabia Friday. President Trump blasted OPEC, but crude held up. Domestic crude stockpiles fell by 1.1 million barrels last week, the Energy Information Administration said, defying views for a small gain. U.S. oil production climbed to a fresh high of 10.54 million barrels a day. Schlumberger (SLB) met Q1 views. Energy stocks were big winners yet again, with more oil plays breaking out or setting up.

Online Brokers Top Views

Charles Schwab (SCHW), Interactive Brokers (IBKR) and E-Trade Financial (ETFC) reported better-than-expected quarterly earnings. Schwab shares reclaimed their 50-day moving average, building the right side of a flat base. Interactive Brokers moved into a buy zone just before earnings, then pulled back slightly. E-Trade moved out of buy range after its late Thursday report.

More Big Banks Report Earnings

Bank of America (BAC) first-quarter earnings topped expectations, while a rebound in trading led to estimate-beating results for Goldman Sachs (GS) and Morgan Stanley (MS). But despite the extra client activity, Goldman reversed lower saying said it would likely pause its buyback for the second quarter. Meanwhile, Comerica (CMA) sank other super-regional banks on weak loan growth in Q1. But with Treasury yields soaring, financial stocks rose off weekly lows.

Airline Safety, Expansion In Focus

A Southwest Airlines (LUV) flight heading to Dallas from New York made an emergency landing in Philadelphia after the jet's left engine exploded, bursting a window and killing a female passenger as a result. The passenger, Jennifer Riordan, was pronounced dead at the hospital. United Airlines (UAL) said it inspecting engines on its Boeing (BA) 737s — the type of plane that experienced the engine failure — following a recent FAA bulletin. United's shares jumped, as the carrier narrowed its expansion plans for the year ahead and stayed upbeat on sales trends.

Merck's Keytruda Tops Bristol's Opdivo Again

Bristol-Myers Squibb (BMY) plunged 13% after reporting that its drug combination of Opdivo and Yervoy reduced the risk of lung cancer progression or death by 42%. That was lower than Merck's regimen of Keytruda and chemotherapy which cut the risk of death in a similar group of lung cancer patients by 51%. Merck (MRK) stock climbed nearly 3%.

U.S. Bans Firms From Selling To China's ZTE

The Commerce Department banned domestic firms from selling components to Chinese telecom gear maker ZTE, sparking a sell-off in optical device makers Acacia Communications (ACIA), Oclaro (OCLR) and Lumentum Holdings (LITE). The U.S. government determined that ZTE violated terms of its 2017 settlement involving illegally shipped networking gear to Iran. Acacia garners 30% of sales from ZTE and Oclaro 14%. Some analysts said Ciena (CIEN), which competes with ZTE in optical systems, could get a lift if the seven-year ban is not lifted.

Alcoa Breaks Out On Prices, Earnings, Outlook

Alcoa (AA) stock broke out past a buy point on record alumina prices, strong earnings and blowout 2018 profit guidance. The aluminum giant's earnings rose 22% while revenue grew 17% to $3.09 billion. Alcoa expects full-year adjusted EBITDA of $3.5 billion to $3.7 billion, up from the $2.6 billion-$2.8 billion range offered in January. It expects industry supply shortages this year after Trump administration sanctions on United Co. Rusal imposed this month barred banned U.S. entities from doing business with the Russian aluminum giant.

Top steel makers Steel Dynamics (STLD) and Nucor (NUE) both edged past first-quarter earnings estimates and issued moderately positive comments about the outlook, with Nucor expecting "sustainable strength" in steel markets. But that's not quite as bullish as steel investors had expected in late February, when President Trump initially called for a 25% tariff on steel imports with no exemptions. Since then, more than half of steel imports have been exempted.

GE Earnings, Revenue Top

General Electric (GE) reported a smaller-than-expected adjusted EPS decline, with revenue rising more than expected. Aviation and health care were solid, while GE Power remained a drag. GE reaffirmed its full-year EPS guidance and said it has no plans to cut its dividend again. GE stock rose Friday,

News In Brief

Amazon.com (AMZN) CEO Jeff Bezos disclosed that Amazon Prime has more than 100 million members worldwide. It's the first time the online sales leader has given a specific membership figure, which was higher than expected.

Textron (TXT) will sell its tools and test business segment to Emerson Electric for $810 million cash. The maker of Cessna jets and Bell helicopters also reported a 95% jump in Q1 EPS to 72 cents per share and a 7% rise in revenue to $3.3 billion, beating analyst views and announced a 40 million share buyback program. Textron soared 12% gapping out past a buy point.

Consumer electronics retailer Best Buy (BBY) and Amazon.com (AMZN) announced a partnership. Best Buy will use Amazon's Fire TV operating system in its Insignia brand televisions, replacing Roku (ROKU) software. Best Buy also will sell its TVs on Amazon's website.

Notice: Information contained herein is not and should not be construed as an offer, solicitation, or recommendation to buy or sell securities. The information has been obtained from sources we believe to be reliable; however no guarantee is made or implied with respect to its accuracy, timeliness, or completeness. Authors may own the stocks they discuss. The information and content are subject to change without notice.